Tax News

CCH (cch.taxgroup.com) reports:

  In response to the continued liquidity crisis making it difficult for taxpayers to fund their operations, the IRS has extended the temporarily relaxed standards set forth in Notice 2008-91, I.R.B. 2008-43, 1001 (TAXDAY, 2008/10/07, I.1) and Notice 88-108, 1988-2 CB 445, for the exclusion of certain obligations from the definition of U.S. property on which U.S. shareholders of a controlled foreign corporation (CFC) are taxed. The IRS has also extended the application of Rev. Proc. 2008-26, I.R.B. 2008-21, 1014 (TAXDAY, 2008/05/13, I.1) to any day during calendar year 2009, for which it is relevant whether securities are readily marketable under Code Sec. 956(c)(2)(J).

 
Notice 88-108 excludes from the definition of the term "obligation" (Code Sec. 956(c)(1)(C)) an obligation that would constitute an investment in U.S. property if it is held at the end of a CFC's tax year, so long as the obligation is collected within 30 days from the time it is incurred. This exclusion does not apply, however, if the CFC holds for 60 or more calendar days during such tax year obligations that, without regard to the 30-day rule, would constitute an investment in U.S. property if it is held at the end of the CFC's tax year.

  Under Notice 2008-91, a CFC may choose to exclude from the definition of the term "obligation" an obligation held by the CFC that would constitute an investment in United States property provided the obligation is collected within 60 days from the time it is incurred. This exclusion does not apply if the CFC holds for 180 or more calendar days during such tax year obligation that, without regard to the 60-day rule, would constitute an investment in U.S. property.

  The new rules provide that, in addition to the period set forth in Notice 2008-91, the regulations described in that notice will apply to the third consecutive tax year of a foreign corporation, if any, including any short tax year that ends after October 3, 2008, and before December 31, 2009.

Notice 2009-10, 2009FED ¶46,246

Other References:

 
Code Sec. 956

  CCH Reference - 2009FED ¶28,576.023

  CCH Reference - 2009FED ¶28,576.35

  Tax Research Consultant

  CCH Reference - TRC INTLOUT: 9,256.15